Daring investors are buying real estate on North Korea’s borders

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When it comes to making money out of North Korea, Chinese real-estate investors could be the proverbial early birds that get the worm.

As the diplomatic efforts to bring North Korea out of the cold intensify, home prices in Dandong, a Chinese town bordering the reclusive state, are rising. Prices jumped 2% in April from a month earlier, the biggest gain among 70 major Chinese cities, according to data from China’s national statistics bureau published Wednesday (May 16).

Last month, new property sales in Dandong almost doubled from a year ago to 290,000 square meters ($3.1 million sq ft) in sold floor space, according to research firm E-house China R&D Institute. The figure, though dropping slightly from March, outstripped those in first-tier cities like Beijing and Shenzhen.

Earlier this week, authorities in Dandong issued new directives (link in Chinese) requiring higher down-payment ratios, restrictions on the reselling of newly purchased homes, and other measures to cool the local property market. “Houses are for living, not for speculating,” the city government said in a statement, borrowing a catchphrase from Chinese president Xi Jinping.

The spike in home sales is not limited to North Korea’s border with China. South Korean investors are also betting on real estate in areas around the Demilitarized Zone (DMZ) that divides the Korean peninsula. Land transactions in Paju, a city located just south of the DMZ, more than doubled in March to 4,600 from a month earlier, Reuters reported citing official data.

Getting rich off North Korea, of course, comes with a lot of risk. This week, North Korea called off a high-level meeting with Seoul at the last minute because of its dissatisfaction with joint military drills between the US and South Korea. It then threatened to cancel a summit planned for June 12 between Kim Jong Un and Donald Trump. Buyer beware.